Sudip Bandyopadhayay

Managing director & CEO,

Convexity Solutions

Hydropower is a capital-intensive sector. Once the plant is

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set up, the cost of producing one unit of power becomes cheaper than any other source. On the other hand, coal-based plants are less capital-intensive and they convert energy into power quickly. Hence, their short-terms gains are higher.

Alternative sources such as solar energy are among the least popular sources of power in India. Therefore, we recommend investors not to buy solar energy-based power stocks.

In the hydropower sector, we feel NHPC is the best buy. The IPO had received an overwhelming response on the listing day, but its prices have been subdued since then. We feel the stock is fairly priced at this level.

As for Sutlej Jal Vidyut Nigam (SJVN), the price is attractive and one can hold it with medium- to long-term perspective.

Among others, coal-based company Calcutta Electric Supply Corpor­ation (CESE) is among the cheapest stocks available on the power counter, as it is trading at a price-to-earnings (P/E) ratio of nearly 10 against the industry average P/E of 20.